New oil rig drilling to begin off Newfoundland

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Even as the massive oil spill in the Gulf of Mexico has raised fears about the safety of offshore drilling, Chevron Canada Ltd. is going ahead with plans this week to drill one of the deepest offshore oil wells in the world off the coast of Newfoundland and Labrador.

The provincial government has defended the company's plans, saying there is no need to be alarmed.

"We're not going to shut down or offshore (drilling) under these circumstances," said Kathy Dunderdale, the province's natural resources minister. "We have a degree of security -- as much as one can rely on -- that the proper measures and countermeasures are in place."

A drill ship will look for crude 2.6 kilometres under water -- nearly a kilometre deeper than the well that broke in the Gulf of Mexico. The well site, dubbed Lona-O55, is located in an area known as the Orphan Basin, 430 kilometres northeast of St. John's.

Some observers have raised fears about the project, saying there aren't adequate resources nearby to cope with a disaster like the one unfolding in the Gulf of Mexico.

In comments made to the Globe and Mail last week, Calgary energy analyst Ian Doig worried that if Chevron gets into problems with its well, there would be no other rigs quickly available that are equipped to drill at the depth of the Lona-O55 site.

"They'll just have to stand back and watch," Doig said.

Lorraine Michael, the leader of the province's NDP party, echoed those concerns on Monday in the province's legislature.

"Why won't they put a halt to this project until we know how to deal with incidents so far beneath the ocean?" she asked.

South of the border, U.S. President Barack Obama and California Gov. Arnold Schwarzenegger have suspended future offshore drilling while investigators probe the Gulf of Mexico disaster.

Dunderdale said the situation in Newfoundland and Labrador does not require similar action.

"What they've put a moratorium on are new approvals, and we don't have any new approvals pending," she said. "The Orphan Basin well was approved before the accident in the Gulf of Mexico."

Sean Kelly, with the Canada-Newfoundland and Labrador Offshore Petroleum Board, said his board is confident in the project.

There have been a number of deep-water drills off the coast of Newfoundland, he said. And while this may be the deepest drilling yet, that doesn't necessarily mean the risk is greater.

"Any time you go into an area like this, there's risk," he told CTV's Canada AM Monday, from St. John's.

He said his board has been assured that Chevron has adequate safety plans and emergency response plans in place, and there is plenty of local capacity to respond to a small spill.

However, if a large disaster struck, he conceded that it would take 11 days for a ship capable of drilling a relief well to arrive.

"But you know, the key in all of this is prevention," Kelly said. "Everybody recognizes that this is the kind of thing we don't want to happen, so had to make sure the measure are in place to prevent that. That's paramount."

He also dismissed criticism that his board has become too cozy with the oil industry.

"We have no role at all in promoting the industry so there's no reason for us to get cozy with them," he said. "Our mandate is simply as regulators."

He stressed again that his board has been assured that this project is as safe as it can be.

"There are never any guarantees in this business. But we are pretty confident that Chevron has met the regulatory requirements of the board. And they've got a state-of-the-art drill ship there."

The Stena Carron drill ship was built in 2008 and has three ways to activate its blowout preventer, which is a wellhead valve that effectively shuts down the well: an acoustic signal sent to the seabed; sending an underwater robot to the seabed; and automatic hydraulic system to shut down a well.

Mark MacLeod, Atlantic Canada manager for Chevron, said his team has redoubled its safety efforts in recent weeks, focusing in particular on the new project's blowout preventer. In comments to the Telegram newspaper in St. John's, MacLeod said Chevron hired a third-party consultant to review the maintenance and reliability of the system.

"We've done a full inspection and testing of the blowout system, and all of the functions of that," he said. "Everything is good to go. We're very confident that we're ready to drill this well safely."

With a report from NTV's Michael Connors and files from The Canadian Press

Photos

The ultra-deepwater drillship Discoverer Inspiration in the Gulf of Mexico on March 30, 2010. Even as the massive oil spill in the Gulf of Mexico has raised fears about the safety of offshore drilling, Chevron Canada Ltd. is going ahead with plans this week to drill one of the deepest offshore oil wells in the world off the coast of Newfoundland and Labrador. (AP / Houston Chronicle, Melissa Phillip )

Sean Kelly, with the Canada-Newfoundland and Labrador Offshore Petroleum Board, speaks to CTV's Canada AM on Monday, May 10, 2010.